The party was founded by Huey P. Newton and Bobby Seale in 1968 in the city of Oakland, California. The party was created to further the movement for black liberation, which had been growing steadily throughout the sixties thanks to the prominent civil rights movement and the work of people like Malcolm X. Though the party always maintained a respectful attitude towards Martin Luther King, it made it clear from the beginning that it sought no compromise with the "white power structure" and was not fighting for integration, but rather for revolutionary black nationalism. The party similarly rejected non-violence as a creed and specifically chose to organize around a platform of "self-defense" (which became part of the party's original name, "Black Panther Party for Self-Defense").

The Party also strove to end drug use in the African American community, disrupting the operations of drug dealers, distributing anti-drug propaganda, and setting up community drug rehabilitation programs.

The Party was targeted by the FBI's COINTELPRO program, which systematically attempted to disrupt their activities and dissolve the party. COINTELPRO achieved this through a combination of infiltration, public propaganda, and the exacerbation of interfactional rivalries, mostly through the mailing of anonymous or forged letters.

On December 4, 1969, the FBI and Chicago Police raided the home of Panther Fred Hampton. The people inside the home had been drugged by an FBI informant, William O'Neal, and were all asleep at the time of the raid. Hampton was shot and killed, as was the guard, Mark Clark. The others in the home were then dragged into the street and beaten and subsequently charged with assault. These charges were later dropped.

A group calling themselves the New Black Panther Party emerged from the Nation of Islam decades after the fall of the original Black Panthers. Members of the original Black Panther Party have been publicly and adamantly critical of them. For example, the Dr. Huey P. Newton Foundation insists that there "is no new Black Panther Party".